Commodity ETFs fall as bearish signals strengthen

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

ETF ANALYSIS FOR:

DBA – JJG – GLD – JJC – USO – UNG – FXE – EEM – SPY

START DATE:                                      July 25, 2012
CORE POSITION:
                              $50,000,000
CURRENT PROFIT:
                          $1,433,614 (2.87%)
LARGEST DRAW-DOWN:
                $160,590 - (0.32%)
RETURN-ON-RISK:
                           8.93 : 1
(UNLEVERAGED and FULL SHARE VALUE)

KEY TERMS
OVB:  Outside Vertical Bar
VRCB: Volatility Reduced Compression Bar

PowerShares DB Agriculture (DBA):
11/02/2012 Closing Price: 28.85
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Working Order: BUY @ 29.11; STOP @ 28.57

Break-Even Price: 29.65; COVER 27,750 (15%)
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: .62
Trading 185,000 Shares

I.T. ANALYSIS:

  • DBA trade losses since 07/25/2012 equal $99,000 or 0.20%.
  • Initial trade risk is $99,900 or 0.20%.
  • DBA is a comprehensive agricultural ETF. Holdings include fairly equally-weighted futures contracts in sugar #11, live cattle, corn, soybeans, cocoa, coffee, lean hogs, wheat, and cattle feeder.
  • Below average trading volume on three trading days resulted in the formation of a VRCB. Initial risk is very low when based on a VRCB, which is one reason we are issuing a BUY at 29.11. Although Friday closed in the lower portion of the weekly range, we believe if commodity prices can find support and trade above last week’s high, then support should follow through in the weeks to come. The OVB that formed three weeks ago is yet to be violated, and the 78% chance of taking out the high, before the low, still exists.

IPath DJ-UBS Grains (JJG):
11/02/2012 Closing Price: 57.92
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Working Order: BUY @ 59.31; STOP @ 56.66

Break-Even Price: 61.96; COVER 7,500 (15%)
Current Downside Targets = 56.94 – 55.80
Projected Weekly Range: 1.90
Trading 50,000 Shares

I.T. ANALYSIS:

  • JJG total trade profits since 07/25/2012 equal $38,280 or 0.08%.
  • Initial trade risk is $132,500 or 0.27%.
  • JJG is concentrated in agricultural grain futures, holding 46% soybeans, 30% wheat and 24% corn.
  • Trading action was nearly identical last week, relative to the previous week. Restricted trading ranges resulted in a weekly VRCB for the second week in a row. Price action was bearish confirmed with a close below the open, below the midrange, and below the previous close. The set up bar from the previous week was never violated to the upside, failing to confirm a bottom and end the correction. We have already traded down to our initial target, 56.94, and we believe support could keep prices above 55.80. If 59.31 trades this week, we will enter a long position with a stop at 56.66.

SPDR Gold Shares (GLD):
11/02/2012 Closing Price: 162.60
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 162.41 – 158.59
Projected Weekly Range: 3.91
Trading 35,000 Shares

I.T. ANALYSIS:

  • GLD total trade profits since 07/25/2012 equal $413,695 or 0.83%.
  • GLD’s single holding is gold bullion.
  • Falling quickly on the current bearish correction, GLD achieved 100% of our downside price target. Price action obtained last week and was bearish confirmed. Friday’s close in the bottom 10% indicates there is a very small chance of rallying back to 167.28 this week. Although the I.T. weekly bar shows significant selling, this was primarily because of Friday’s gap lower open and continued sell-off. Since buying-selling pressure indicators reversed a month ago, GLD has failed to trade up to the previous week’s high. This is a strong signal that selling should continue until finding support above 158.59, our extended downside price target.

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